SEC Releases Final Rule 192 Relating to Conflicts of Interest in Securitization

December 06, 2023

Key Takeaways

  • Definition of “Sponsor”: The final rule refines the definition of "sponsor," notably by eliminating the “directing sponsor” category and introducing an exception for certain long investors.
  • “Conflicted Transaction” Definition: The final rule amends the potentially problematic clause (iii) of the “conflicted transaction” definition to include only transactions that are “substantially the economic equivalent” of an otherwise prohibited transaction.
  • Affiliates and Subsidiaries: The final rule limits the affiliates and subsidiaries of securitization participants that are subject to the rule, including only those that either act in coordination with a named securitization participant or have access to information about the transaction prior to its closing.
  • Effective Date: The rule takes effect 60 days after its publication in the Federal Register. Compliance will be required for securitization participants for any asset-backed security with respect to which the closing of the first sale occurs 18 months after the rule’s publication in the Federal Register.

The SEC released the final Securities Act Rule 192 relating to conflicts of interest in asset-backed securities transactions on November 27, 2023. In this OnPoint, we summarize the provisions of the final Rule 192 and important commentary provided by the SEC in the adopting release, and we highlight key changes from the initial proposal.


*The authors would like to thank Frederieke Demas for her contributions to this OnPoint.

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